What are Gross Rating Points?
Gross rating points (GRP) help you measure how big an impact your ad campaign can achieve. With GRP, the focus is on the volume that can be delivered: GRP looks at how frequently you plan to show an ad and combines that with how much of the audience you can reach via your chosen channels.
GRP is used mainly in media planning and ad buying, where it’s used as a shorthand for the potential scale and volume of an ad’s exposure. Since coming into use in the 1950s, GRP has become the main metric in TV advertising buys, especially in the US.
For digital advertising, GRP presents the possibility of merging TV and digital ad transactions, especially for video. If used for online media, some advertisers argue, GRP can allow for direct comparisons of TV and digital ad values, as well as ease the process of running crossover campaigns.
How Does GRP Work?
You can calculate GRP using a simple formula:
Ad Frequency x Percent of Audience Reached = GRP
Where do you get percent of audience reached? You start by looking at the average total population for your audience. Then, you take estimates of past performance: how many of a certain population have typically tuned in to your chosen delivery medium or channel. These estimates come from groups like Nielsen, which conduct surveys and market research.
Here’s an example. Let’s say you plan to run an ad five (5) times during a certain TV show. Nielsen might tell you that 25 million households watch that show on TV every week. There are 118.4 million TV-watching households in the US, so you would get your reach estimate by:
[illustration of computation: (25 M households / 118.4 households) x 100 = 21.1% of audience reached]
You’d then get GRP for the ad by accounting for how often your ad runs:
21.1 x 5 = 105.5 GRP
Yes, it’s possible to get a GRP value higher than 100. As the “gross” part of the name implies, GRP doesn’t filter for unique audience exposure; that is, it can—and actually expects to—count audiences more than once. As an example, advertisers who set a long time period for their GRP calculations (to project campaign performance over the course of a month, say, or a year) would have higher frequency numbers, resulting in larger GRP values.
Bear in mind that the GRP equation can get very complex for actual ad campaigns. As you consider factors like the different networks or publishers you want to work with, the range of audiences you can get from different areas, and so on, your GRP calculations will have to accommodate more values.
Besides those factors, remember that GRP doesn’t prescribe specific approaches. A GRP number only sets out the total potential reach for your campaign. You could arrive at the same GRP via multiple combinations of ad frequency and projected audience coverage.
GRP and Ad Buying
Ad buys, especially in TV advertising, can be negotiated based on rating points. Advertisers can peg their payment rates on the number of rating points they get for a particular ad spot, for example.
In this context, GRP acts as a quick way for advertisers to convey their ad campaign’s targets. Likewise, publishers can use GRP as a shorthand for the value that advertisers can expect from the ad spots they’re looking to buy.
Why Does GRP Matter?
GRP has mostly been a TV-centric metric, but that doesn’t mean digital advertisers should ignore it. For some advertisers, GRP has the potential to serve as a bridge between traditional media and digital. If digital advertising adopts GRP, these advertisers claim, comparing campaign performance across media formats will be much easier. Those comparisons, in turn, can help make the case for shifting bigger slices of advertisers’ budgets to digital.
Facebook, for example, now works with Nielsen to gauge Facebook ad performance versus traditional TV spots. The generated data gives advertisers more fodder for plotting out how digital can fit into their campaign plans, paving the way for more holistic campaign performance measurement.